An economist expects a moderate pick-up in retail spending over the next year, as shoppers remain cautious about parting with their cash and the housing market gradually improves.
Official figures show retail spending fell 1.5% in the first three months of the year, led by falls in supermarket and accommodation spending.
When spending on vehicles and fuel is stripped out, core spending fell 2.5% the largest seasonally-adjusted fall since the series began in 1995.
Westpac markets economist Michael Gordon says the fall had been largely expected, as the sales boost from the 2011 Rugby World Cup ebbed away.
Despite the decline, Mr Gordon says indicators of domestic spending are relatively robust, with a strong pickup in spending on durable goods and few signs of retailers discounting products to boost sales.
On an annual basis, retail spending rose 4.4% in the year to the end of March - compared with almost 8% in the previous quarter.
Mr Gordon says much of the increase has been factored in by the Reserve Bank and that they would not be surprised by the results.
Meanwhile, the ASB says confidence in the housing market remains steady.
The bank's Housing Confidence Survey for April reveals 21% of respondents say now is a good time to buy a house, compared with 21% in the previous quarter.
ASB economist for Christina Leung says the survey also reveals a nationwide lift in house price expectations.
Ms Leung says it is surprising to see that rising house price expectations have spread from Christchurch and Auckland to the rest of the country.
